Lynch predicted up to a 3 percent growth in gross domestic product for 2018. “We continue to favor areas of the market which may benefit from the return of the business cycle, including moves toward value, small-cap stocks, financials, industrials, and technology.”
Brad McMillan, chief investment officer for Commonwealth Financial Network, said the obligation now is to consider whether this correction will get worse.
“I still don’t think this is the big one. I do have to admit, however, that it has come far enough that I am taking a closer look,” McMillan said. “For those who are looking for the actual worry point, it is around 2,540 on the S&P 500 and 22,800 on the Dow. While we are above those points now, we are actually not that far away.
“It is getting really close to ‘paying attention’ time [but] it is not getting close to ‘reacting’ time,” he said. “That point would be when the indices drop below a longer-term trend line, probably the 400-day moving average. We are nowhere close to those levels, and I suspect we won’t get there.”
McMillan feels this confidence because of the strong economy and rising corporate revenues and profits.
“Valuations, while high, are now more reasonable than they were a couple of weeks ago,” he added. “Finally, many of the risks -- inflation, a government shutdown, and geopolitical concerns -- are either moderating or likely to do so. The conditions for a sustained drawdown, based on history, simply are not in place.”